It shouldn't come as too great a surprise that Toyota scaled back plans this week to manufacture the battery-powered eQ city sedan. The question is: why did a carmaker that has always been skeptical of EVs invest in the eQ in the first place?

"The current capabilities of electric vehicles do not meet society's needs," said Takeshi Uchiyamada, Toyota's vice chairman and the engineer who oversees vehicle development, on Monday, "whether it may be the distance the cars can run, or the costs, or how it takes a long time to charge."

But Uchiyamada, who led Toyota's development of the Prius hybrid in the 1990s, must have had a hunch that would be the case.

At an appearance last year in Chicago, a key member of Uchiyamada's team—Prius designer Bill Reiner—expressed doubt that all-electric vehicles could ever succeed—because of the cost and weight of the battery, and the comparative energy density of fossil fuels:

“In a Prius, in an 18-pound gas tank that’s 450 bucks, I can get you 600 miles or thereabouts,” said Reinert, the national manager of Toyota’s Advanced Technologies Group. “In an electric car, the battery is somewhere around $15,000 to $25,000 and it will take you about 100 miles, maybe, on a good day if it’s not too cold and not too hot. There’s a giant difference in energy density.”

Batteries lose capacity over time, so to avoid battery failure, electric-car manufacturers make batteries twice as large, and twice as heavy, as the car really needs, Rieinert said: As a result, much of the power in the battery is spent transporting the battery.

Much of the cost derives from the battery as well.

"GM is losing money on every single one of these vehicles," said Mike McMahan, ComEd's vice president for smart grid and technology, at an appearance in Chicago this week. "They're very dedicated to it. It costs GM $60,000-$70,000 per vehicle to manufacture each one of these. They're selling them for much less than that. Most of that cost is in the battery."

And while sales might seem slow—only 2.5 to 3 percent of new cars purchased in America are electric—that's exactly where sales were expected to be, according to a February 2010 prediction by the Electric Power Research Institute, McMahan said.

It seems more likely that Toyota never intended more than a token rollout of eQs, to meet the requirements of governments like the state of California, which requires major automakers to produce and deliver for sale a minimum percentage of zero-emission vehicles.

Jim Motavalli of Mother Nature Network confirmed as much with Toyota spokesman John Hanson: “With California’s ZEV mandates, you get more credits if you bring in a car for car sharing," Hanson said. "We’re still moving ahead with a small-volume eQ program here in California.... It’s going to be seen in car-sharing programs and on campuses."

Far from indicating the demise of the electric vehicle, the plight of the eQ shows that EVs are right where the experts, at Toyota anyway, thought they would be.